In response to a challenging year across various industries, global sportswear giant Nike has unveiled plans to reduce its workforce by hundreds of jobs as part of an extensive cost-cutting strategy. The company is aiming to achieve savings of $2 billion by implementing layoffs and enhancing automation in specific services, as reported by The Guardian.
The decision to trim the workforce comes on the heels of a downturn in sales experienced by Nike over the past year. The US-based apparel firm cites the need for organizational streamlining as the driving force behind these layoffs. To facilitate this restructuring, Nike has allocated $450 million for severance packages and other restructuring efforts to support affected employees.
Despite a marginal 1 percent increase in sales over the last three months, Nike has not witnessed a significant surge in its financial performance throughout 2023. While there has been an improvement in profit margins, the company remains cautious about its retail outlook due to ongoing declines in sales.
The announcement had an immediate impact on Nike’s stock prices, with a notable 10 percent decline during after-hours trading. This decline aligns with a broader trend in the sporting apparel sector, where other industry players like JD Sports and Sports Direct are also grappling with falling stock market values.
This recent round of job cuts is the second significant instance for Nike, following the termination of 700 employees in 2020 during the global Covid-19 pandemic. The company’s strategic move reflects a concerted effort to navigate challenges and position itself for future growth in an ever-evolving market landscape.